Can California Cannabis Companies Combat Racial Inequality?

Here in Oakland, those convicted of marijuana trafficking are getting a new opportunity to launch California cannabis businesses under the city’s Equity Applicant system. The goal is provide longtime residents, typically those who live below the poverty level – including those who have prior convictions for marijuana sales – get assistance in starting a cannabis business.

City leaders say the goal of the Equity Applicant system is to right the fallout of many years of a failed “War on Drugs,” which hit poor minority communities especially hard. As USA Today recently reported, nearly 80 percent of those arrested for marijuana crimes in 2015 were black. Conversely, whites made up just 4 percent of those arrested. Meanwhile, the city’s population is evenly divided – 30 percent black and 30 percent white. What this shows, officials say, is a clear bias in policing, especially because we know that blacks and whites use marijuana at rates that are comparable.

Police received formal orders in 2004 to make the majority of marijuana offenses – particularly possession – the lowest priority in terms of enforcement. It’s even lower than jaywalking. Still, businesses that cultivate, manufacture and distribute the drug are overwhelmingly white. That’s true in Oakland and across California. City leaders want to change this.

In some jurisdictions, leaders pointed out, no marijuana business permits were given to any people of color. A system that does not incorporate equity applicant opportunity further perpetuates inequality, leaders say.

The equity system acts much like a form of affirmative action. It mandates that half of all new medical marijuana licenses be given to those who:

Have lived in Oakland for at least 10 of the previous 20 years;

Are low-income OR

Have a prior non-violent marijuana conviction.

Existing pot shop owners are not surprised at the move, noting Oakland has long been ahead of its peers when it comes to establishing progressive marijuana policy. It was one of the first municipalities in the country to establish a marketplace for medical marijuana. Many other jurisdictions borrowed from its regulatory framework in creating their own. The hope is the Equity Applicant system will help the city tap into talent that has long been underutilized.

One provider in Oakland, Harborside, serves an estimated 1,000 consumers daily. Harborside’s owner said both the clientele and the staff are reflective of the community’s racial makeup – something that is less common in similar operations in Washington, Oregon, Colorado and Alaska.

Primarily dominant within marijuana business ownership are white, middle-class operators. Part of this has to do with the fact that current regulatory schema tends to favor those who have access to family money and a no criminal record. Start up costs can be high, and many of those living in low-income neighborhoods simply don’t have the means. While many new business owners struggle with start-up capital, there is the option of a federal Small Business Administration loan. However, those who have poor credit or don’t have their own home to take out a second mortgage for the purchase of equipment and space are going to have difficulty getting an operation off the ground.

Officials say there was a long-perpetuated system of institutional racism that criminalized the actions of minority communities, while offering drug traffickers with lighter skin the opportunity to turn their operation into a legal business.

Local cannabis business owners say they don’t fear the competition, and that more competent business owners in this industry can only help make for a better overall market.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 714-937-2050.